California’s tight housing inventory, slower economy constrain pending home sales


CALIFORNIA ASSOCIATION OF REALTORS – A continued lack of housing inventory and slowing economy sent California pending home sales lower in June, but pending sales were still higher than the previous year for the fourteenth straight month, the California Association of Realtors (CAR) reported today.

Pending home sales data

CAR’s Pending Home Sales Index (PHSI) fell 3.8 percent from a revised 126.1 in May to 121.4 in June, based on signed contracts. Pending sales were up 4.7 percent from the 115.9 index recorded in June 2011.

June marked the fourteenth consecutive month that pending sales were higher than the previous year, although June’s year-over-year increase was the smallest since April 2011. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

“Pending sales declined in June, partly due to a lack of housing supply – especially in REO properties,” said CAR President LeFrancis Arnold.

“The shortage of REO inventory is also putting upward pressure on bank-owned home prices, with the median price of REO properties showing a double-digit year-over-year gain of 11 percent in June,” Arnold said.

Distressed housing market data

• The share of California’s equity sales – or non-distressed property sales – compared with total sales grew further in June. The share of equity sales rose to 58 percent in June, up from a revised 56 percent in May. Equity sales made up 50.5 percent of all sales in June 2011.

• The share of REO sales statewide was significantly lower from a year ago, while the share of short sales was up slightly. The combined share of all distressed property sales fell to 42 percent in June, down from May’s 44 percent and from 49.5 percent in June 2011.

• The share of short sales edged up in June to 21.4 percent, up from 21.1 percent in May and from 20 percent a year ago.

• Of the distressed properties, the share of REO sales continued to decline in June to 20.2 percent, down from 22.6 percent in May and 29.2 percent in June 2011.

• The available supply of REOs for sale tightened slightly in June, with the Unsold Inventory Index declining from a 1.5-month supply in May 2012 to 1.4 months in June 2012. The June Unsold Inventory Index for equity sales stood at 3.7 months and was 5.3 months for short sales.

Multimedia and charts

June closed sales, by type
Pending sales vs. closed sales
Historical trend equity sales vs. distressed sales
REOs, short sales, equity sales supply

Source: “California Association of Realtors: June pending and distressed sales report”

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